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Require a publicly advertised price for a house to be a legally binding offer to sell at that price
invite response
2017 Feb 27, 6:57pm 20,138 views 59 comments
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indigenous
2017 Apr 19, 8:19am
It seems to me that Patrick is talking about some form of estoppel. This usually applies to a quote or a lease agreement. It would be a stretch, but this seems to be a possibility.
How widespread of a problem do you believe this to be? Nationwide or just the Special Snowflakes that just have to live in The Bay Area ? Doesn't seem to be an issue here in the Susquehanna Valley.
One problem i see here, is you would have to leave the seller an out. Many people that are selling a property, live in it, and their ability to vacate is contingent upon their securing a new place to move to. So I can see a situation where I want to sell you my house, at asking, and you want to buy it. However, my deal on the next place fell through, so now i no longer want to sell
Also, I'm not sure it's a problem in need of a solution. Say someone is selling their place, and are content with taking 250k. Both you and I really, really want that particular place. It's unique and there won't be another place in this area with these particulars. Isn't the most equitable solution, a bidding war?
Patrick
2017 Apr 19, 8:37am
If the bid were real, perhaps.
But how do you know any other bid is real when all you have is a realtor's word for it?
Do you trust "realtor ethics" when making the biggest purchase of your life?
Dan8267
2017 Apr 19, 10:16am
Dan brings up the game theory involved with continuous long term relations versus short term one of transactions. I would say another factor is the size of the transaction.
Yes, people only make a few very large purchases in their lives. As such, large purchases tend to be one-time transactions and thus are particularly susceptible to defection. Also, the payout matrix is different. When the reward for defection is high, it is almost certain to be the optimal strategy even if you lose a lot of sales.
One of the keys to economic prosperity is to eliminate perverse incentives, that is, to align the fiscal incentives of the individual with those of society.
Patrick
2017 Apr 19, 10:24am
One of the keys to economic prosperity is to eliminate perverse incentives, that is, to align the fiscal incentives of the individual with those of society.
Yes, this is what makes Georgism such a good idea.
It eliminates the perverse incentives to monopolize land (land ownership currently has low taxes) and to stop working (work currently has high taxes).
FNWGMOBDVZXDNW
2017 Apr 19, 10:42am
defection
Is there a specific meaning of this related to game theory or do you just mean going back on an offer? My point regarding large sales was just that it is not worth negotiating on the price of something small. Negotiation takes time for both the buyer and seller. Thus, it's a lose lose proposition to haggle over small purchases. But for big purchases, it's worthwhile, especially if done efficiently.
rando says
But how do you know any other bid is real
Why does it matter? I think that what you are really objecting to is a buyer who gets sucked in at price X, makes an emotional decision to buy it, then when the seller asks for another $20K, the buyer goes ahead and pays it, because they don't want to 'lose' the house. In some cases, a sale is made even though the buyer would never have bid at X+$20K. I do believe that this happens a lot, because it probably works.
Dan8267
2017 Apr 19, 12:13pm
Is there a specific meaning of this related to game theory or do you just mean going back on an offer?
In game theory, there are two basic moves a player can make in a multi-player game. One is to cooperate with the other player(s), and the other is to defect, that is to harm the other player for the sake of some personal gain.
The classic example is called Prisoner's Dilemma. Two prisoners who cannot communicate with each other are in separate rooms and given the same choice. Each can either rat the other one out or stay silent. If they both stay silent, they both get very light sentences due. If they both rat each other out, they both get a long sentence. If one rats the other out and the other stays silent, the rat gets goes free and the silent person gets a very long sentence.
The optimal solution is for both to cooperate, but it is in the interest of each individual to defect regardless of what the other person does. Hence, the prisoners both rat on each other and both get longer sentences.
Everything is math including morality.
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Unethical real estate agents (but I repeat myself, lol) in California normally ask prices for properties lower than the seller would ever accept.
Why would they do this?
The answer is that lying about the acceptable price is a well-established fraud which has proven effective in cheating buyers out of their money. The fraudulent advertisement of an unacceptably low price as if it were acceptable consistently provokes naive buyers to bid more than they otherwise would bid.
The idea is to make the market look super-hot to encourage the highest bidders to bid even more. Once the house is sold, the realtor can breathlessly claim that there were many bids and the house sold over asking when in reality, the asking price was a cruel and fraudulent lie, and the house would never have sold at all if the only bids were actually at the asking price.
We have laws against bait and switch when selling toasters. Why don't we then have laws against bait and switch when buyers are making the biggest purchase of their entire lives? The answer is simple: corruption of our lawmakers via bribes (aka "campaign contributions") from the real estate industry.
The solution here is to demand honesty from real estate agents, something that will never happen without the force of law behind it, because real estate agents are almost uniformly unethical. Every publicly advertised price for a house must be a legally binding offer to sell at that price within the next 30 days.
Without this, we will continue to get the sleaziest occupation manipulating the public for profit. Even whores provide value. Real estate agents provide no value at all.
#housing
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